Hamilton Beach Brands Holding Co. (HBB) Misses Q4 EPS by 2c

Hamilton Beach Brands Holding Co. (NYSE: HBB) reported Q4 EPS of $1.43, $0.02 worse than the analyst estimate of $1.45. Revenue for the quarter came in at $207.1 million versus the consensus estimate of $222.3 million.

Outlook for 2020

Following the closure of Kitchen Collection's retail operations at the end of 2019, the Company entered 2020 with a focus on Hamilton Beach Brands' strategic priorities of revenue growth, margin expansion and strong cash flow generation. Hamilton Beach Brands will continue to implement its Strategic Initiatives, which are designed to gain long-term profitable growth and increase shareholder value. Please see the Investor Perspective below for more information about the Company's Strategic Initiatives and long-term growth plan.

Hamilton Beach Brands business is seasonal with a majority of its revenue and operating profit earned in the second half of the year when sales of small kitchen appliances to retailers and consumers increase significantly to prepare for the fall holiday selling season. For the past five years, on average, 60% of revenue and 85% of operating profit have been earned in the second half of the year. However, consumer confidence in the economy, household finances, trends in spending levels and retail industry fundamentals will ultimately determine the results of the holiday selling season.

As retailers firm up their commitments for the fall holiday selling season, the Company's outlook will be updated as appropriate. Based on known placements and current market trends, the Company expects revenue to grow modestly in 2020 compared to 2019 and outpace the industry, which is expected to be relatively flat overall. Hamilton Beach Brands expects growth in all markets, including U.S. Consumer, International Consumer and Global Commercial. The ecommerce channel and Only-the-Best products also are expected to continue to grow. Operating profit, given currently known retailer plans, is expected to be in the range of flat to a modest increase compared to 2019. As second half placement clarity increases, the outlook will be updated. The Company expects modest gross margin expansion as it continues to focus on the sale of higher priced, higher margin products; however, certain one-time decreases in selling, general administrative expenses in 2019 will not repeat in 2020. Cash flow before financing activities is expected to increase significantly in 2020 as the Company moves toward its goal of exceeding $20 million. Cash flow in 2020 will benefit from inventory levels more in line with historical levels and the carryover into 2020 of significant trade receivables, which are expected to be collected in the first quarter. Planned capital expenditures in 2020 are $5.2 million. The effective tax rate in 2020 is expected to be approximately 25%. This outlook is based on the Company's current understanding of the impact of the coronavirus on its suppliers in China, and if the situation changes, the outlook could change.

For earnings history and earnings-related data on Hamilton Beach Brands Holding Co. (HBB) click here.

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